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Wednesday, October 17, 2012

Oct 16: In the U.S. Court of Appeals, Ninth Circuit, Case No. 10-70211, 10-70707, 10-70743, 10-70782, 10-70813, & 10-70843. On Petition for Review of an Order of the Bonneville Power Administration. The consolidated petitions for review challenge a contract between the Bonneville Power Administration (BPA) and one of its long-time customers, Alcoa Inc. BPA's preference customers, as well as other entities and organizations in the Pacific Northwest, filed the petition for review, requesting that the Appeals Court hold that the contract is unlawful because it is inconsistent with the agency's statutory mandate to act in accordance with sound business principles.

The Petitioners claim that instead of entering into a contract to sell power to Alcoa at the statutorily required Industrial Firm power (IP) rate (a costbased rate prescribed by 16 U.S.C. § 839e(c)(1) for sales of power to customers such as Alcoa), BPA should sell to other buyers at the market rate. BPA's decision not to do so, petitioners allege, forgoes revenue that could otherwise be used to lower the rates charged to its preference customers. They further argue that BPA relied on flawed data in determining it would make a modest profit by selling surplus power to Alcoa.

Alcoa also petitions for review, asking the court to hold that the Equivalent Benefits standardis contrary toBPA's governing statutes, Alcoa makes the request because such a judicial determination is a condition precedent for the commencement of a five-year period (the Second Period of the Alcoa Contract) during which time BPA would continue to sell power to Alcoa at the contracted rate. In May 2012, the Alcoa Contract was amended to remove all references to the Second Period.

In a partially split decision, the majority Appeals Court said, "We dismiss the petitioners' and Alcoa's challenge in part as moot, and otherwise reject their claims." Additionally, one Justice wrote a separate and concurring opinion. In conclusion, the majority said, "The petitioners' challenges to the Alcoa Contract ask us to second-guess BPA's policy judgment regarding the costs and benefits of its sale of electric power. But the belief that another approach might have been wiser is not a valid basis for jettisoning an agency action as arbitrary and capricious. We therefore deny the petitions for review insofar as they pertain to the Initial Period. Because the potential for BPA and Alcoa to enter into the Second Period of the contract is no longer before us, we dismiss those portions of the petitions. Finally, we hold that because BPA relied on a categorical exclusion to NEPA's requirements, declining to complete anEIS was not arbitrary and capricious. Accordingly, we deny petitioners' NEPA claim. Dismissed in part and denied in part."

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